Question

A problem is listed below. Identify its type. Mr. Garcia is planning for retirement. He deposits $750 each month into a retirement account. The account pays 8% per year compounded monthly. How much will he have in 18 years when he retires?

Answer 1

360,064.59

Step-by-step explanation:

x=\frac{750\left(\left(1+\frac{.08}{12}\right)^{216}-1\right)}{\left(1+\frac{.08}{12}\right)-1}

Answer 2

$361,648

Step-by-step explanation:

PMT (Monthly Deposit) = $750

i/r = 8%/year

= 8/12 = 0.67%/month

n = 18 years = 18 x 12 = 216 months

PV = 0

Input these above information into excel/financial calculator, we have:

FV (Amount he has when he retires) = $361,648

OR we can do the calculation manually:

FV = (750 x 1.0067^216)+ (750 x 1.0067^215) + ... (750x1.0067^1) + 750

= $361,648